U.K. GDP revised down, as Bank of England maintains split
By William L. Watts and Lisa Twaronite, MarketWatch
LONDON (MarketWatch) — The U.S. dollar lost ground against most major currencies Wednesday, as appetite for the greenback waned before the release of some November housing data.
The dollar index (DXY 80.72, +0.00, +0.00%) , which measures the U.S. unit’s performance against a basket of six major currencies, declined to 80.422, from 80.711 in North American trade late Tuesday.
“Conditions look set to stay fairly volatile as liquidity deteriorates ahead of the Christmas break, with the focus at this stage led by commodities rather than fundamentals,” wrote strategists at Lloyds TSB in a research note.
Gold and copper were lower Wednesday, a day after copper futures hit a new record high.
Investors are likely to focus on a report of November existing home sales, paying little heed to a final estimate of third-quarter U.S. gross domestic product, strategists said.
Economists surveyed by MarketWatch forecast existing home sales to rise 8.4% to 4.8 million after a 2.2% drop in October. The National Association of Realtors will release the data at 10 a.m. Eastern.
The euro (EURUSD 1.3089, -0.0008, -0.0611%) rose to $1.3124, from $1.3096 Tuesday. But it slipped to another record low against the Swiss franc (EURCHF 1.2514, -0.0038, -0.3027%) and changed hands at 1.2521 francs in recent action. See real-time currency quotes and tools.
The Greek parliament late Wednesday is set to vote on budget cuts totaling €14 billion. Prime Minister George Papandreou’s Socialist government is expected to prevail, although the latest round of austerity measures triggered another round of strikes and protests.
Meanwhile, the European Central Bank said Wednesday that it allotted €149.47 billion in loans to commercial banks in its three-month refinancing operation, one of its special liquidity measures. The rate will be indexed to the central bank’s weekly main refinancing operations, which are widely expected to remain at 1%.
The total was in line with expectations ahead of the expiration of about €201 billion in three- and 12-month refinancing operations this week.
The Australian dollar (AUDUSD 0.9996, +0.0034, +0.3414%) traded at 99.76 U.S. cents, up from 99.70 U.S. cents Tuesday.
Against the Japanese yen, the dollar (USDYEN 83.4800, -0.2900, -0.3461%) bought ¥83.55, down from ¥83.78 late Tuesday.
“Our quantitative estimate suggests that USD/JPY [U.S. dollar/Japanese yen] has overshot on the topside and, although we are bullish on USD/JPY over the longer term, there is scope for a correction lower,” said currency strategists at Credit Agricole.
The pound (GBPUSD 1.5391, -0.0080, -0.5172%) erased a small gain to trade at $1.5452, down from $1.5469 late Tuesday. The euro rose 0.4% versus sterling to fetch 85.07 pence.
The U.K. Office for National Statistics lowered its estimate of growth in third-quarter gross domestic product to 0.7% from a previous estimate of 0.8%. Year-on-year growth was revised down to 2.7% from a previous estimate of 2.8%.
As expected, minutes of the December meeting of the Bank of England’s rate-setting Monetary Policy Committee showed policy makers remained split three ways over the direction of policy. Read about the Bank of England minutes and third-quarter GDP.
William L. Watts is a reporter for MarketWatch in London.
